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An Investigation on the Colossal Success of Larsen and Toubro Limited:

Human Resource Management Perspective

Article  in  Pertanika Journal of Social Science and Humanities · December 2012

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 Pertanika J. Soc. Sci. & Hum. 20 (4): 1261 - 1274 (2012)

SOCIAL SCIENCES & HUMANITIES

Journal homepage: http://www.pertanika.upm.edu.my/

An Investigation on the Colossal Success of Larsen and Toubro

Limited: Human Resource Management Perspective
Saurav Goel1* and Arti Parmar2
Heriot-Watt University, Edinburgh- EH14 4AS, United Kingdom
1

ABC Consultants, New Delhi- 110019, India

2

ABSTRACT
Larsen and Toubro (L&T) Limited is India’s largest construction conglomerate. L&T’s
expertise is harnessed to execute high value projects that demand adherence to stringent
timelines in a scenario where disparate disciplines of engineering are required to be
coordinated on a critical path. However, no company can acquire such a feat without
systematic management of its human resource. An investigation on the human resource
management practices in orienting L&T’s success can help to identify some of the ethical
human resource practices, especially in the context of Indian market. Accordingly, a well-
designed employee satisfaction survey was conducted for assessment of the HRM practices
being followed in L&T. Unlike other companies, L&T aims to meet the long-term needs
of its employees rather than short-term needs. There were however few areas of concerns,
such as yearly appraisal system and equality to treat the employees. It is postulated that the
inequality to treat the male and female employees is primarily a typical stereotype due to the
fact that construction is conventionally believed to be a male dominant activity. A periodic
survey intended to provide 360° feedback system can help to avoid such irregularities.
This study is thus expected to provide healthy practices of HRM to nurture the young
talents of India. This may help them to evaluate their decisions by analyzing the complex
relationship between HRM practices and output of an organization.

Keywords: Human resource management, India, Larsen and Toubro Limited

ARTICLE INFO INTRODUCTION

Article history:
Received: 24 October 2011 While few individuals believe that
Accepted: 22 April 2012 technology is a means to an end, Larsen
E-mail addresses:
[email protected] (Saurav Goel),
and Toubro (L&T) believes that technology
[email protected] (Arti Parmar) represents endless possibilities. L&T’s
* Corresponding author

ISSN: 0128-7702 © Universiti Putra Malaysia Press

 Saurav Goel and Arti Parmar

continual colossal success over the past tool for expatriate managers (Budhwar
few decades has been primarily due to & Boyne, 2004). Also, strategic HRM
its employees who have contributed literature suggests that HRM indirectly
significantly during its technologically affects the firm’s performance through a
driven global operations (www.Lntecc.com, casual chain of mediating variables like
accessed on 9/08/2011). Moreover, HRM employees’ attitudes, employee’s behaviour
practices have been realized to play a key and employee’s performance which are
role in driving the performance of a firm and compounded by the fact that employees’
governing the organizational effectiveness perceptions of how and why HRM is
(Dyer & Reeves, 1995). For this reason, implemented throughout the organization
an acute need to improve the theoretical has a considerable impact on their attitudinal
and analytical framework on three thrust and behavioural responses. However, not
areas of HRM, namely, the nature of HRM, only HRM practices but the role of two
nature of organisational performance and HR actors, namely, line managers and HR
linkage between HRM and performance, department, also determine employees’
has been greatly realized (Guest, 1997). affective commitment (Gilbert, De Winne,
From a careful analysis, it is ostensibly & Sels, 2011).
evident from Fig.1 that HRM practices India, in this context, has now liberalized
within an organization are the fundamental its economic policies and has emerged as
drivers which regulate the position of an one of the foremost economies contributing
organization in the modern competitive significantly through technical minds in
market. all aspects of business. The evolution of
Nevertheless, cultural values are also Larsen and Toubro Limited (L&T), as the
identified to play a key role in governing the country’s largest construction conglomerate,
HRM practices which lead to the emergence is among the most remarkable success
of International Human Resources stories. Beginning with the import of
Management (IHRM) (Ngo, Turban, Lau, & machinery from Europe in 1938, L&T
Lui, 1998). As firms are getting globalized, rapidly took over and begged some of the
HRM issues are becoming more sensitive outstanding major contracts both within
resulting in the transformation of the roles and outside India. This enabled L&T to set
of HRM shown schematically in Fig. 2. global engineering benchmarks in terms
In modern scenario, both industrialists of scale and complexity of construction
and academicians are interested to understand projects. This is also the reason that Mr. P.
the relevant HRM policies and practices Chidambaram (Former Finance Minister of
for different types of organizations, i.e. India) has stated L&T as the India’s only
public/private sector, manufacturing/service company in the “National Sector” while Dr.
sector in different geographic locations APJ (Former President of India) has lauded
of the globe as it could be a good training L&T as “Salt of Nation”. A more detailed

1262 Pertanika J. Soc. Sci. & Hum. 20 (4): 1262 - 1274 (2012)
 An Investigation on the Colossal Success of Larsen and Toubro Limited: Human Resource Management Perspective

Fig.1: Linkage between HRM practices and associated outcomes (Guest, 1997).

history of evolution of L&T over the years division with operations spanning mostly
has been described elsewhere (www.Lntecc. at the site while the HRM practices are
com, accessed on 9/08/2011). implemented from the Regional offices
L&T’s broader areas of business are having additional support staff to assist the
shown in Fig.3. L&T–ECCD is the biggest site based staffs. This makes L&T a true and

Pertanika J. Soc. Sci. & Hum. 20 (4): 1263 - 1274 (2012) 1263
 Saurav Goel and Arti Parmar

Fig.2: The changing roles of HR management

Fig.3: L&T’s broader areas of business

complex multinational company. RESEARCH METHODOLOGY

Inspiring with the success of L&T An employee satisfaction questionnaire was
and its relevance in the context of Indian developed to serve two purposes: to evaluate
economy, this paper aims to identify the the employee’s perception towards the
HRM practices being followed in the ECC company and to adjudge their satisfaction
Division of L&T. According to the survey towards the operational HRM practices.
results, some areas of concerns and remedial The motive of the questionnaire was to
measures are discussed in the following mainly address the key HR functions which
sections. are related to the performance of L&T,

1264 Pertanika J. Soc. Sci. & Hum. 20 (4): 1264 - 1274 (2012)
 An Investigation on the Colossal Success of Larsen and Toubro Limited: Human Resource Management Perspective

i.e. job climate, boss/supervisor relation, responses. Therefore, it is better to adjudge

recruitment and selection process, the the mode of the responses to interpret the
appraisal system, benefits and compensation data.
and the quality of training provided. The
study was conducted at one of Regional RESULTS AND INTERPRETATIONS
offices based at New Delhi, India. The statistical bar chart represents the data
As far as the survey and sampling collected from the questionnaires indicating
method is concerned, simple random the percentage of employees on ordinate
technique was used to design the sample. and their responses on abscissa. The
From the available total staff list, one interpretations made from the various charts
out of every 10 employees was randomly are discussed in the subsequent paragraphs.
selected as a part of the sample. From a
total of 800 employees (comprising both Job Climate
of technical and clerical staff), a sample
In the response of a question concerning job
size of 80 was designed to administer the
climate about individual differences being
employee satisfaction questionnaire. The
felt by the employees of L&T, the response
questionnaire was consisted of 33 questions
of various participants is shown in Fig.4. It
(all close-ended) and a likert scale of 1-5
can be seen that the maximum mode belongs
was used to quantify the response, in which
to neutral response signifying no individual
scale 5 refers to a high degree of agreement
difference exist as such.
or satisfaction and scale 1 refers to a high
However, a careful interpretation shows
order of disagreement or dissatisfaction.
that the total mode of strongly agree or
Accordingly, intermittent values of 4, 3
merely agree is quite large signifying that
and 2 represents an agreement, neutral
the participants do feel the individual
response and disagreement of an employee
differences. Taking this into account, the
respectively. Likert scale is an ordinal
mode of facing individual differences
scale and hence, only degree of difference
(Strongly agree + agree) exceeds the neutral
in the responses can be known rather than
response. Hence, it will be unambiguous
the specific amount of difference in the
to say that the majority of employees

Fig.4: Experience individual differences (gender, race, background etceteras)

Pertanika J. Soc. Sci. & Hum. 20 (4): 1265 - 1274 (2012) 1265
 Saurav Goel and Arti Parmar

(10.81%+27.03%=37.84%) feels that an (Fig.6) exists as far as promoting innovation

individual differences on account of gender, within the company is concerned. In a
race, educational background etc. are often nutshell, the majority (10.81% + 35.14% =
experienced. Based on a personal discussion 45.95%) agrees that innovation in the work
with various participants, the authors noted is rewarding. Moreover, it could eventually
that this is particularly true with female be the reason that although employees are
employees. Hence, the authors postulates not recognizing the importance of KAIZEN
that the inequality to treat the male and in short term, but it could potentially be
female employees is plausibly due to the a reason of L&T’s success because the
fact that construction is always thought implementation of KAIZEN is always a
to be a male dominant activity, which is long-term goal for an organization to excel
not the case in modern scenario. Since, in its field.
this was the convention, it has become a Based on the bar chart shown in Fig.7,
typical stereotype in L&T which needs to the two separate interpretations can be made
be carefully dealt with. as follows:
Fig.5 shows that a high majority of i. The margin between satisfaction and
(51.35%+10.81%) = 62.16% employees dissatisfaction is very low. In fact, the
stated that the amount of work is reasonably majority of the samples were found to
assigned to them. This signifies that work be neutral on their responses.
load is fairly distributed and the majority of
ii. No extreme satisfaction or dissatisfaction
employees are not considering the work load
exists among the employees regarding
as a potential problem for them.
the job.
The word KAIZEN is synonymous
to “constant quest for improvement”. It
Boss/ Subordinate Hierarchy Relation
originated from the Japanese language,
which means “improvement”, or “change Interpretation from Fig.8:
for the better”. A very significant difference Managerial cadre employees were
between neutral and agreed responses asked to give their opinions on the Likert
scale about their sub-ordinate’s know-how

Fig.5: Work load is reasonable

1266 Pertanika J. Soc. Sci. & Hum. 20 (4): 1266 - 1274 (2012)
 An Investigation on the Colossal Success of Larsen and Toubro Limited: Human Resource Management Perspective

on the work assigned to them. As evident However, it is equally important to

from the bar chart, a very positive response retain the talent within the organization,
was received. In fact, 89.18% of them felt failing which the efforts to train the
that their sub-ordinates are cognizant about employees to make them perfectionists
their work. could go in vain as the competitors could
virtually be benefited by hiring such skilled
Recruitment/Selection employees. Although it was found that high
Interpretation from Fig.9 and Fig.10: quality employees were attracted by L&T,
Recruitment is an integral part of an no substantial efforts are being made in
organization that reflects company’s growth retaining them. A majority of the employees
over the period of time. Since a recruitment (18.92%+21.62%= 40.54%) still think that
process consumes both time and money, L&T needs to pay more attention to care for
companies prefer to select skilled employees its employees in order to retain them. This
in the first instance itself. In fact, finding the percentage margin however is in very close
right person for the right job ensures high competition with 32.43% of the respondents
productivity. This was also seen to be true who were neutral.
with L&T, as 54.06% of its employees are
happy with the L&T’s process of attracting
new employees.

Fig.6: Management encourages innovations, creativity and KAIZEN

Fig.7: Overall, how much satisfied are the employees with the job

Pertanika J. Soc. Sci. & Hum. 20 (4): 1267 - 1274 (2012) 1267
 Saurav Goel and Arti Parmar

Performance Appraisal System (Fig.11 performance on account of leniency errors,

and Fig.12) Halo effects, affective reactions, attribution
As much as the retention of talent in an bias, similar-to-me Errors and stereotyping
organization is concerned, equally important could lead to frustration in employees’
is to be very accurate and fair in evaluating minds towards the organization. Such a
the performance of an employee in a scenario is unfavourable.
yearly appraisal system. An employee puts In order to continue to grow as a whole,
all his efforts over the year to make his it is important for an organization to make
good reputation among peers, colleagues unbiased evaluation. It was found that the
and boss. A wrong evaluation of the majority of employees (around 56%) were

Fig.8: My supervisor is having knowledge of the work

Fig.9: L&T do a good job in attracting high quality employees

Fig.10: L&T cares for its employees and puts efforts to retain them

1268 Pertanika J. Soc. Sci. & Hum. 20 (4): 1268 - 1274 (2012)
 An Investigation on the Colossal Success of Larsen and Toubro Limited: Human Resource Management Perspective

happy to inform that their previous year’s appraisal unlike previous evaluations done
appraisal system was accurate reflection of so far. This is again an example of a typical
their work/performance. stereotyping effect in the minds of the
However, on the transparency of the employees towards the organization which
appraisal system, 52% of the respondents needs due attention.
stated neutral responses while 32% showed
disagreement. The authors believe that Benefits and Compensation
although the employees were promised of Interpretation (Fig.13):
anonymity of the research data, they might About 70.27% of the employees
have had fear about their names being were found content with the currently
highlighted to their boss for revealing the implemented leave policies.
true facts and so they might have preferred to
be neutral. However, a major group of about Training and Development (Fig.14 and
32% stated that there is no transparency in Fig.15)
the appraisal system. This is in contrast to One of the popular things which is very
the previous observation that their previous well-known about L&T is that it pays ample
year’s appraisal system was fair. However, attention on proper training to nurture its
it is likely that it is only the current boss employees. Despite the fact that training
who was fair in evaluating the current is being given a huge attention, it was

Fig.11: My last appraisal accurately reflects my performance

Fig.12: Appraisal system is fair

Pertanika J. Soc. Sci. & Hum. 20 (4): 1269 - 1274 (2012) 1269
 Saurav Goel and Arti Parmar

surprising to see earlier that minimal efforts on the quality of training rather a very high
were put to retain its employees. This is percentage of satisfaction prevailed.
further compounded by the fact that the However, employees think that the
competitors of L&T, like Shapoorji Pallonji process of training can slightly be modified
and TATA, will always be in a hunt to capture by adjusting the amount of time spent on the
L&T’s employees, realizing that they are training. Precisely, majority of employees
highly trained workforce. Accordingly, (45%) believes that ample time should be
L&T should put more efforts in retaining spared for training and development, albeit,
its employees. It was ostensibly clear from the quality of training is excellent.
the bar chart that no dissatisfaction exist

Fig.13: Content with the quantum of leave.

Fig.14: Quality of training and development

Fig.15: Amount of time spent on training and development.

1270 Pertanika J. Soc. Sci. & Hum. 20 (4): 1270 - 1274 (2012)
 An Investigation on the Colossal Success of Larsen and Toubro Limited: Human Resource Management Perspective

HR Services In the current case, a large number

Interpretation (Fig.16 and Fig.17): of the respondents (8.11% +27.03%
In a vibrant and gigantic organization = 35.14%) showed satisfaction, while
like L&T, communication with HR 32.43% were neutral, and almost 32% of
department is the only feasible option for them (18.92%+13.51% = 32.02%) were
an employee to communicate his views dissatisfied with the HR services. This is
to the organization. Lack of attention or a typical response where all the responses
mismanagement in communication could were of virtually equal magnitude. A
lead to great discomfort to its employee, more detailed survey, with a large group
which could further cause a conflict in of employee can probably help to clearly
the mind of an employee. This could identify a better answer to this problem.
potentially bring a suspect in the employee’s
mind which could enforce him/her to DISCUSSION AND CONCLUSION
think to switch to another job. Thus, HR Human Resource Management (HRM)
services play an important role by moulding Department of L&T has set some of the
the employee’s mindset through their global benchmarks by following ethical
managerial and technical acumen. practices to satisfactorily meet the long-

Fig.16: HR portal system is transparent and provides sufficient information.

Fig.17: HR related queries are attended on time.

Pertanika J. Soc. Sci. & Hum. 20 (4): 1271 - 1274 (2012) 1271
 Saurav Goel and Arti Parmar

term needs of its employees. It has been due attention and can be improved using an
established from the available information effective tool like 360° feedback system:
and primary data collection that the Based on the negative feedback on
Personnel and Organization Development various responses as indicated in the above
(P&OD) Department’s performance in conclusions, the following recommendations
managing its resources and HR functions can be incorporated for implementation:
is good and has met the major needs of its •• Development and implementation of
employees to date. It is also evident that the a policy to ensure that the individual
employees share a great deal of pride in their differences like gender, race or
work and are glad to be associated with the educational background are not
company. However, the following majors experienced by the employees.
concerns have been found and they need

Conclusions of the survey

HR Function Positive feedback Negative feedback
Job Climate The amount of work assigned to Individual differences based on gender, caste,
an employee is reasonable and background, etc. are felt by the employees
the management encourages its on major occasions. This is most likely the
employees to put forth novel and result of a typical stereotype convention
innovative ideas into work. toward females on account of male dominant
gender group.
Boss/ The management is proud to induct -
Subordinate quality of employees who are
hierarchy sincere towards their work.
Recruitment L&T does attract the right quality L&T needs to put more focus on retaining its
of employees and select the right employees as this is one of the weaker areas
person for the right job. identified. Virtually, with highly trained
workforce that L&T has, competitors will
always pose a great threat in attracting the
employees of L&T.
Performance The employees do believe that the A transparent appraisal system needs to be
appraisal system appraisal does reflect their past developed. On a personal note, it is noted
performance. that the appraisal sent through lower channel
is sometimes overruled by senior officer on
the account of individual differences which is
unjustified.
Benefits and Major satisfaction exists. -
compensation
Training & Sound quality of training The time spent is slightly short which makes
development programmes are well implemented it difficult for its employees to realize
in L&T to ensure the regular and absorb the content of the training
development of the employees. immediately.
HR Services A large group of sample population Timely response of HR department in
is required to be surveyed to handling day-to-day queries is one of the
make more detailed and accurate weaker sections.
interpretation.

1272 Pertanika J. Soc. Sci. & Hum. 20 (4): 1272 - 1274 (2012)
 An Investigation on the Colossal Success of Larsen and Toubro Limited: Human Resource Management Perspective

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ACKNOWLDEGEMENTS
Authors remain deeply indebted to all the
employees of L&T, Delhi Regional Office,
for their cooperation in this successful study.

Pertanika J. Soc. Sci. & Hum. 20 (4): 1273 - 1274 (2012) 1273
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